Tax Foes Attack Net Neutrality

Calling itself a conservative response to moveon.org's pro-"network neutrality" regulation lobby, the Internet Freedom Coalition has formed to "fight regulation of the Internet."

The "network neutrality" issue is tied to the 1996 Telecommunications Bill rewrite currently being considered on Capitol Hill. Specifically, it is the debate over whether to specifically define and regulate network neutrality, which, loosely, is nondiscrimination in the provision of Internet access service. But how different groups tighten that definition, and what they say that means for the Internet, is the crux of the debate.

The new coalition, including limited-government groups like Americans for Tax Reform, the Center for Individual Freedom, and Tennessee Center for Policy Research, argue that tough network neutrality language in the bill would be "the first major attempt by Washington to regulate the Internet." They will fight moveon.org's Internet fire with fire, promising to launch a massive e-mail campaign, take out Internet banner ads to fight what is says will be a tax on the Internet.

For example, Americans for Tax Reform monitors Senate and House votes for its "pro-free market" rating. Any legislator who votes for tougher network neutrality regs will lose that rating, the group says.

Why is network neutrality regulation a tax? If networks aren't allowed to recoup their build-out costs by charging more for bandwidth, security or other services, the argument goes, they will have to pass them along to customers.

The telcos have already been in discussions with companies like Disney about setting up secure, large-pipe networks, most likely for bandwidth-hungry applications like video.

The FCC began to bring the network neutrality issue to a boil last fall after a court upheld the FCC's decision (in the so-called Brand X case) not to require cable operators to open their networks to outside Internet service providers (ISP's).

To level the playing field, the commission extended that decision to the telephone companies while at the same time pledging its allegiance to general principals of network neutrality and saying it would monitor network practices with an eye toward weighing in if the freedom were abused.

Those general principles, with FCC power to adjudicate and punish violators, have been Incorporated into a House version of telecom reform that could be voted on as early as this week. But the bill does not authorize the FCC (technically give it the rulemaking authority) to come up with enforceable network neutrality regulations, and a Senate version of the bill does not even go as far as the House, only directing the FCC to study the issue.

Moveon.org and others argue that without specific network neutrality regs and the FCC authority to back them up, networks will turn the internet into a toll road, charging some users more for faster access speeds, which will disadvantage Internet entrepreneurs with the next Google or Yahoo but not enough money to pay the toll.

Telcos concede they want to set up differential pricing schemes in part to help pay for the rollout of broadband service. But they have also pledged not to discriminate in terms of what sites users can access.

Critics say that a system that allows a company to buy more bandwidth and speed will be defacto discrimination and will chill innovation.